engleski

Independent Directors Myth in Transition Countries–Comparison of Empirical Evidence from China and Croatia

The situation in the corporate governance of transition countries remains one of the key issues in development of an efficient business environment. As the world increasingly turns to the market and away from regulation and control, the governance of the corporation and the role of the board of directors in governance take on heightened importance. Independent directors are the cornerstone of good corporate governance. Their duty is to provide an unbiased, independent, varied and experienced perspective to the board. In this paper we analyze and quantify influence of board composition in respect to dependence/independence of its members in the sample of largest non-financial firms in Croatia. While it is reasonable to expect that lack of independent directors creates room for violations of rights and infringement legitimate interests of shareholders what in turn represents a significant obstacle in increasing the level of competitiveness, research results show that there is no such connection. On the contrary, research shows how companies with dominant influence of dependent directors perform better than companies which are dominantly governed by independent directors. The comparison of research results with another country which is characterized by internal system of corporate governance-China, leads us to discussion about existence and role of truly independent directors.

transition; corporate governance; board of directors; independent directors

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